Will Ethereum take a turn for the worse in Q4 due to The Merge?

While 2022 was turning out to be one of the worst years for crypto and investors, Ethereum’s Merge was expected to be the turnaround event for the market. However, disappointing everyone, the direction taken by the market did not pan out to be as per forecasts. The question is will this continue down the line as well?

What The Merge changed for Ethereum

Apart from the ongoing broader market downtrend, which kept ETH closer to the cycle lows, the anticipation surrounding The Merge was met with both positive and negative reactions. 

Until the event on September 15, about 4.19 million ETH worth $5.32 billion had already been sold at the hands of holders. But right after The Merge, investors began buying ETH back, and within a week, 1.15 million ETH, amounting to $1.46 billion, left the exchanges.

Ethereum exchanges’ supply

Unfortunately, ETH’s price began trickling instead of rising, bringing ETH below $1,300 at the time of writing. Rightly so, a bunch of long-term holders (LTHs) were also observed moving their holdings around, destroying over 1.26 billion days in the process. These days are basically the amount of ETH held by investors multiplied by the time since they were last moved.

Ethereum LTH supply movement

But with the third quarter coming to an end soon, ETH might be able to turn the situation around and close the year on a good note, provided ETH can make past these crucial levels of resistance.

The three resistances

The first of these is for short-term traders who practice scalping or intra-day trading. On the 4-hour chart, $1,426 is established as the critical resistance since the level has been tested multiple times since July for higher lows. Breaching this will also place ETH right above the second major resistance, which is the downtrend wedge.

ETH USD 4-hour price chart

In place since the last all-time high of November 2021, this downtrend has been tested several times in the past and failed to be flipped into support despite being breached. Thus, if ETH manages to achieve it this time, it will be on the path to testing the third and most crucial resistance - the 23.6% Fibonacci level.

Ethereum 24-hour price chart

Coinciding at $1,591, this Fib retracement of $3,520 to $996 decline stands to be the bounce-off point for recovery. If it is reclaimed over the next seven days, ETH could be on the way to performing better, provided it is hit with no bearish cues before New Year 2023.